Knowing you have full coverage from your travel insurance can give you peace of mind whilst enjoying your holiday. But when you need to claim, the last thing you want to hear is that your insurance excess is greater than your loss.
Most of us buy travel insurance without paying too much attention to the excess costs, we are much more interested in ensuring we are covered for all we need. In this article, we will guide you through all you need to know about excess, what to look out for and how to ensure you are covered on your terms.
What is travel insurance excess?
Insurance excess is the amount of money you will have to pay the insurance firm whenever you submit a claim and can be seen as a deductible which will apply to all or some of your policy.
It might seem like something ridiculous for an insurance company to add since you are already paying for your policy, but it can save you money on your premium. This is due to excess shifting some of the risks from the insurer back to you.
How does excess affect my insurance premium?
Excesses are added to insurance policies as an offset to the premium you pay upfront. If you have a high excess, you tend to pay a lot less on your premium. This can be a great way to save if you tend to go on a lot of short breaks or business trips, as there is a lower risk of you having to claim.
However, if you are going on a hiking or skiing trip, the chances of an injury and needing to claim become much higher. In this scenario, a high excess will only cause you an unnecessary headache, so it’s probably more beneficial to choose a policy without an excess.
When do I have to pay an excess?
Travel insurance excess is generally calculated per incident as well as per item on your policy. For example, if you have your bag stolen with a wallet in it, you will claim one incident with two items for baggage and money.
In all likelihood, you will have no excess on the medical insurance bit of your policy, but have to pay excess for situations like losing your baggage, missing a flight and having accommodation cancelled.
It’s important that you go through your policy in detail and decide if the package you are looking to buy suits your needs.
Also be aware that the excess on items may differ for each person added on the policy, given their age and health. Excess can also be payable per person when claiming for an incident which involved everyone covered.
Can I control the amount of excess I pay?
Insurance companies will offer you different available upgrade packages which cover you for different scenarios. A higher cover policy will be more expensive upfront but will allow for lower excess on certain items. On the other hand, if you would like to pay less initially, you can pay voluntary excess on certain policy items to directly drive down your premium.
When making a final decision, take a moment to calculate whether or not your excess will be more than the item you are insuring. For example, if you estimate your luggage at £100 and your excess for claiming baggage loss is £40, then you will only be receiving £60 back from the insurance.
Or, if you’re travelling for £39 on a special flight deal and your excess for flight cancellation is £30 then you will only receive back £9.
Travel insurance excesses - summary
Based on the above factors, we have created the following guide to help you decide on your next travel insurance, based on their excess:
- Determine the risk involved with your travel. If you have a high risk - go for lower or no excess policies with a higher premium. If you have a low risk - find a lower premium option which includes excess on certain items.
- Determine which items on your policy include extra excess and make a list of them.
- For each item on the list, determine if the excess is within a reasonable limit based on your travel and expenses.
- Lastly, always read the fine print of your policy. Make sure you know exactly in what scenarios you are not covered and whether your excess is payable upfront or deducted from your pay-out.
Be travel savvy and don’t get caught off guard by knowing and fully understanding your policy.